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Saturday, April 23, 2011

What the Chinese Can Teach Us about Capitalism

In China, in 2007, the richest 10% of the population earned, on average, 23 times as much as the poorest 10%. In the United States, in 2008, the richest 0.01% of the population earned, on average, 875 times as much as the poorest 90%.

Chinese officials are worried about this trend. They fear that such income disparity could anger the poor and lead to social unrest. Thus, they have taken steps to forestall resentment--steps like imposing restrictions on ostentatious displays of wealth at funerals and in burial arrangements.

The official American response to income inequality includes such steps as ensuring that tax breaks for the richest citizens remain in place, vilifying unions that represent middle-class workers, and doing everything possible to shred whatever social safety nets have been put in place to protect the poorest.

Now, China has an authoritarian political structure and a popular tradition of respect for authority. But even they are worried enough about popular resentment that they have taken steps (albeit modest) to remedy at least the appearance of flagrant inequality. Americans have considerably less respect for governmental authority (see, for better or worse, the Tea Party). How long will it be before their far-more legitimate grievances boil over?